Ahuriri v Etheredge

[2014] NZHC 2137

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-000514 [2014] NZHC 2137

UNDER	the Property Law Act 2007
IN THE MATTER OF	an application for a division of property in kind among co-owners
BETWEEN	FRANCES ANN AHURIRI and JOSEPH ISAAC TAHITAHI and JACOB WIREMU TAHITAHI Plaintiffs
AND	ARINA FRANCES ETHEREDGE Defendant

Hearing:	[On the Papers]
Counsel:	M J Koppens for the Plaintiffs D J Taylor for the Defendant
Judgment:	5 September 2014

REASONS JUDGMENT OF DUFFY J

[Re Refusal of Adjournment and Application to Amend Counterclaim]

This judgment was delivered by Justice Duffy on 5 September 2014 at 3.00 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Counsel:     M J Koppens, Warkworth

D J Taylor, Hamilton

Solicitors:    Dyson Smythe and Gladwell Lawyers (B J Lupton), Warkworth

A N McAllen, Hamilton

AHURIRI and ORS v ETHEREDGE [2014] NZHC 2137 [5 September 2014]

[1]      The plaintiffs and respondent are co-owners of two blocks of rural land in Pakiri.   The plaintiffs have applied under the Property Law Act 2007 for orders vesting one block of land, with a realignment of the boundaries, in the plaintiffs and the other realigned block in the respondent.   The hearing of the application commenced on 18 November 2013.   It was adjourned part-heard following a site visit, as it was hoped by the parties that they could reach agreement on the proposed boundary realignment.   If they had, there was the potential for each group to own one block (with its own dwelling-house) outright.  However, no such agreement was reached.  When the matter came back to Court for a resumed hearing, the argument focused on an amended proposal, which became known as the “Buckton” proposal, after the surveyor who prepared its plan.

[2]      With the Buckton proposal, there were two outstanding issues on which the parties could not agree.   First, they could not agree on a boundary realignment. Secondly, there was an issue regarding valuation of an interest that the respondent held  giving  her  occupation  of  what  I  will  describe  as  the  original  homestead (“the homestead”).  The parties acquired co-ownership of the two blocks of land by testamentary disposition.   The will-maker, the late Agnes McCarthy, left the two blocks in joint ownership to her two daughters with a provision in the will that her elder daughter was to be entitled to live in the homestead rent free during her lifetime, and the younger daughter was given a similar right of occupancy on the death of her sister.  The respondent is the younger daughter of the will-maker.  The plaintiffs are the grandchildren of the will-maker.  Their mother, who was the will- maker’s eldest daughter, predeceased the will-maker.

[3]      The valuers have valued the right of occupancy of the homestead that the respondent presently enjoys as $114,000 including curtilege, and $45,000 without curtilege.  This was done applying actuarial principles on which the parties’ valuers were agreed.  The respondent’s valuer has added another factor to this value, which is something that is disputed by the plaintiffs’ valuer.

[4]      Towards the end of the resumed hearing, the parties’ counsel raised questions about the legal character of the right of occupancy.  The plaintiffs submitted that the right of occupancy was lost by merger as a result of the lawyers for the will-maker’s

estate transferring all ownership rights in the two blocks to the respondent.   The respondent contended that she was taken by surprise by this submission because the parties had conducted the case on the basis that the respondent did enjoy a right of exclusive occupancy of the homestead.  Later, the respondent acknowledged that by operation of s 62 of the Land Transfer Act 1952, it may well be that her right of occupancy under the will merged on 4 August 2006 when legal title to the two blocks was transferred from the estate to her.  The plaintiffs were not registered on the title of the two blocks until 18 March 2008, approximately 18 months later.

[5]      Faced with the prospect that the right of occupancy was lost, and with it the foundation for a claim for compensation, the respondent sought an adjournment so that she could amend her counterclaim.  I adjourned the hearing to the following day to give the parties a better opportunity to present arguments on the respondent’s application.

[6]      The respondent submitted that she was not responsible for the loss of the right of occupancy, and that the fault lay with the lawyers who had handled the transfer of the two blocks of land from the estate to her.  She argued that the loss of this right had unjustly enriched the plaintiffs, as they were no longer bound by the requirement in the will, despite them being fully aware of it.

[7]      The respondent did not present the Court with a draft of the allegations to be made in the proposed amendments to the counterclaim.  Instead, her counsel read out to the Court various excerpts from texts, and cases on the law of restitution.  Further, her counsel acknowledged to the Court that the matters that she would seek to raise in the counterclaim could be brought separately against the plaintiffs.

[8]      The   plaintiffs   opposed   the   application   and   any   amendment   to   the respondent’s counterclaim.  They have been seeking a resolution of the ownership issue for a number of years now.  With the resumed hearing, they found themselves close to, if not at, the finish line of what had been for them an arduous journey.  The respondent is their aunt, and the need for partitioning the two blocks of land has generated much tension within their whanau.   They argued that the principle of

finality precluded the respondent introducing an entirely separate cause of action, particularly as it would entail an almost fresh start to the proceedings.

[9]      I  refused  the  application  for  an  adjournment  to  enable  the  filing  of  an amended counterclaim.  Because by then the hearing time was almost exhausted and the parties wanted time to prepare their closing submissions, I made timetable directions for the filing and serving of closing submissions.   I now provide my reasons for refusing the respondent’s application.

[10]     The present counterclaim sets out the respondent’s proposal for partition of ownership of the two blocks of land.  However, following the site visit in 2013, the respondent no longer pursues the partition option set out in the counterclaim.  So the present counterclaim is redundant.  The parties are largely agreed on the realignment of the boundaries of each block of land.  That is set out in the Buckton plan.  The outstanding issues are whether an area of approximately 2.7 hectares should be in the block known as K3A, or be part of the block known as K3B.   Then there is the question of whether compensation should be paid to the respondent for the loss of the right under the will to occupy the homestead.  Under the Buckton proposal, she will acquire sole ownership of a block of land on which the homestead is sited (K3B).   The present right of occupancy will only be hypothetically lost as her ownership of K3B will enable her to reside in the homestead.

[11]     For  the  respondent  to  introduce  a  fresh  claim  based  on  restitutionary principles of unjust enrichment as a foundation for payment of compensation for loss of the occupancy right, there would need to be a new hearing with fresh evidence.  In short, it would return the proceeding to the starting blocks.  As the lawyers of the will-maker’s estate were responsible for the situation where the two blocks were transferred entirely to the respondent, thus bringing about the merger of the occupancy right, evidence from them might be required.  Indeed, they might have to be joined as parties to the proceeding.  If the plaintiffs found themselves defending an unjust enrichment claim that arose from the conduct of the estate lawyers, the plaintiffs might want to add those lawyers as a third party, or issue a cross-claim against them.  The way in which this potential claim was outlined to me was enough to cause me to believe that if the proposed claim were to be pursued properly,

interlocutory steps might be required, and new evidence would certainly be required. All this was likely to delay the resolution of the partitioning of the two blocks for at least another year.

[12]     Secondly,  because  the  respondent  had  not,  in  the  time  available  to  her, prepared a draft counterclaim setting out the proposed claim for unjust enrichment and restitutionary relief, it was not possible for me to assess the merits of this claim and, therefore, where, for the respondent, the justice of the matter lay.  Indeed, I have referred to the proposed claim in the rather nebulous fashion of “unjust enrichment” and “restitution” because this is how the respondent described it to me.

[13]     On  the  other  hand,  the  injustice  that  the  plaintiffs  would  suffer,  if  the proceeding were halted and the respondent given an opportunity to reconfigure her case against them, was clear to me.   They have been wanting an answer on the partition question for some time now.  Their lives have been placed on hold as they can do nothing with the land they presently own until it has been partitioned.  Given the proceeding was in the final stages of its substantive hearing, they understandably wanted a conclusion.

[14]     The   respondent   acknowledged   that   she   could   bring   her   proposed “restitutionary” claim as a separate proceeding.  So it seemed to me that to refuse the adjournment and the opportunity to amend the counterclaim would not preclude the respondent from making her “restitutionary” claim against the plaintiffs.   I was aware that a separate claim might be more costly for the respondent.   But on the other hand, any late adjournment that allowed her to reconfigure her claim against the plaintiffs was likely to lead to her paying above scale costs for the inconvenience and additional cost this caused the plaintiffs to suffer.  Thus, on any approach, it was going to be a costly exercise for her to pursue this new claim.

[15]     I was aware that the idea of the right of occupancy having merged with the transfer of the title was recent.  However, both counsel accepted that legally, merger of  the  respondent’s  interests  in  the  two  blocks  of  land  had  probably  occurred. Neither they, nor I, could close our eyes to that potential legal position once it became known.

[16]     From what I could make of the respondent’s “restitutionary claim”, it did not look strong to me.  The plaintiffs did not acquire their legal ownership of the two blocks of land until some time after it was transferred to the respondent.  They had no control over what had occurred earlier on.   The merger was unconnected with their conduct.  If the respondent had suffered a loss, it seemed to me that the more obvious party to look to for compensation was the estate’s solicitors.  They would have known of the terms of the will, and they should have been aware of the legal consequences of transferring both blocks of land to the respondent.

[17]     Taking all of the above matters into account, I considered that the interests of justice were best served here by allowing the proceeding in its present form to proceed to a conclusion.  So I refused to adjourn the hearing, and refused to allow the respondent an opportunity to amend her counterclaim to include a fresh cause of action based on unjust enrichment and the law of restitution.

Duffy J